The world of politics loves the use of political gimmicks – terms and phrases that sound beneficial but lack details in execution. The problem is the long-term impact of these political gimmicks, even as the masses demand the slogans being offered. But there is no free lunch or policy without impact.
Examples of what some call political gimmicks include the drone testing site in Rome, NY. It was promised by 4 elected officials (from the State to Federal level) to bring some 2000 – 4000 jobs to New York State. In exchange over $6 million in Federal and State funds have been allocated to the effort (with promises in excess of an additional $11 million to come). Thus far, 6 jobs have been confirmed created via FOIA requests of the Federal, State, and local City government.
Yet another quick fix for the business unfriendliness of New York is casinos. 6 casinos will be placed across the State, several in hard hit communities struggling with poverty and unemployment. In the Southern Tier, initially looked over in the first round of applications, hopes are high that a casino will create much needed jobs. But no consideration has been given to the most glaringly obvious fact of what casinos do.
To be successful, a casino must take money away from people – whether that is tourists or the local community. Considering the competition of established casinos in PA, NJ, and CT alone (not to mention a planned casino in NYC itself), the odds of a casino depending on the local community is increased. The net impact, no matter how many jobs are created, is that the meager discretionary income in the Southern Tier and other struggling areas of NY will be the food local casinos will dine on. The long-term effect is a drag on the community, not a supplement to it.
In the same vein of short-sighted and soundbite friendly promises is the recent decision July 22, 2015, to minimum wage increases for fast food workers. The 30 second soundbite is that increasing the wage to $15 will eliminate poverty. The popularity for the idea is about as large as is the discussion on consequences associated with such a move.
Seattle was one of the first cities to succumb to the slogan of income equality. As has been well documented, the result has been less than underwhelming. The increase has thus far resulted in long-term increases in business closings. Unable to maintain a profit, or even break-even, many restaurants closed their doors – placing workers into the hands of government aid. But the results do not stop there.
With the increase in wage (to a mere $11 in the first stage of increases), many of the minimum wage workers (who nationally are a mere 3% of all workers) have become priced out of various government entitlements. Food Stamps and other supplements are no longer available to the new income brackets some workers enter. In fact it has been reported on July 24, 2015, that some workers are reducing their hours just to maintain the government aid for food, rent, and healthcare.
“If they cut down their hours to stay on those subsidies because the $15 per hour minimum wage didn’t actually help get them out of poverty, all you’ve done is put a burden on the business and given false hope to a lot of people,” said Jason Rantz, host of the Jason Rantz show on 97.3 KIRO-FM
But what does this mean for New York? Again looking at the Southern Tier as an example – specifically Binghamton, NY – the impact of increasing fast food workers to $15 has many ramifications. Just as in Seattle, small businesses and fast food franchises work on slim profit margins that a 50% increase in pay likely will not support. Like in Seattle, the increase in pay will cause many of the roughly 3,390 fast food workers (3.3% of workers in Binghamton), earning on average $9.38/hour, to lose food stamps and other government aid. Unmentioned, and with dramatic potential impact, is the effect that the wage increase will have on subsidies for health care insurance – many will need to pay more for insurance and may owe the government in the next IRS tax review.
Beyond just the monetary impact, what does the wage increase for 3% of the workforce say to the community? Effectively, the increase in pay is a statement to substitute teachers ($15.20/hour average according to Bureau of Labor Statistics) that they may have wasted years of their lives and incurred debt that was unnecessary. Likewise paramedics ($14.21), medical assistants ($14.20), nursing assistants ($13.63), pharmacy technicians ($13.07), radio and television announcers ($12.92), veterinary assistants ($12.61), childcare workers ($9.56), and a host of other professions either incurred debt and/or wasted years of learning when they just could have learned to flip a burger. As the NY Times noted on July 27, 2015,
“Now, for the first time, Ms. Hayes and her colleagues at the day care center have begun looking wistfully at the big chain restaurants down the street. Maybe flipping burgers might get them closer to their dreams.”
In fact, more than 59,220 people in Binghamton (58.3% of workers excluding fast food) alone would do better by becoming a fast food worker than remain at the job they have.
The solution election hungry politicians might offer is to increase the minimum wage for everyone. But that does not resolve the problem, it only magnifies it. That’s tens of thousands (in Binghamton, NY alone) that would no longer qualify for government aid. That’s tens of thousands that would run afoul of Obamacare and taxes. It would increase the number of businesses that could no longer afford to employ workers from perhaps a few dozen to potentially hundreds or more. All without considering the cost of goods or other inflation.
Politics of the soundbite, the tried and true gimmick of politicians, is a powerful tool to ensure (re-)election and party loyalty. It plays hand in hand with kicking the problem down the road, and blaming the other party for the consequences. Ultimately though, no matter what the soundbite, no matter the Party that uttered it, the long-term reality cannot be avoided. Just like when crowd cheered on the call for an even bigger Obama Stimulus, the ultimate reality was that there were no shovel-ready jobs. As President Obama himself admitted in 2010 (after spending over $862 billion taxpayer dollars plus interest still accumulating in the national debt)
“…there’s no such thing as shovel-ready projects.”
The same people that assured the nation of shovel ready jobs, that guaranteed you could keep your doctor, that celebrated a summer of recovery as the economy got worse, that are cheering the secret terms of the Trans Pacific Partnership, are on board for the latest soundbite ride to the election. But, ultimately, long-term, the inescapable reality is that government doesn’t create jobs, it can’t legislate people out of poverty, and the louder the cheers the more the public should pay attention to the details.